April 12, 2023

3 Reasons Why SaaS Vendors Are Raising Prices and What You Can Do About It

SaaS Insights

Fight software price rises and stay proactive in managing your SaaS subscriptions to get the most bang for your buck.

Richard Gargan

As businesses increasingly rely on SaaS, they face challenges such as rising prices due to inflation, feature unbundling, and even "greenwashing." In this blog post, we'll explore these challenges and offer practical tips to help businesses optimize their SaaS subscriptions. From conducting cost-benefit analyses to negotiating with vendors and using a SaaS management platform, we'll provide insights to help you get the most value from your SaaS investments. So, let's dive in and learn how to stay savvy in managing your SaaS subscriptions.

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1. Inflation

While inflation can be a real and significant problem for businesses and consumers alike, some vendors may use it as a way to justify price increases that are not entirely necessary. In the case of SaaS pricing, the inflation rate is currently increasing at a rate that is four times higher than market inflation alone can account for. This means that some vendors may be using inflation as a scapegoat for price increases that are driven by other factors, such as increased demand or changes in the competitive landscape.

2. Environmental Greenwashing

SaaS vendors are planning to increase their prices over the next few year, and one of the justifications they may use is the cost of their environmental sustainability programs, according to a report by Gartner. The report suggests that charging more for sustainable operations may not reflect actual costs as green data centers are designed to be more efficient, ultimately lowering costs. Gartner recommends probing vendors’ sustainability claims to detect "greenwashing." Inflation and labor costs are the other reasons cited for SaaS providers to increase prices.

3. Feature Unbundling

One way that vendors are increasing costs is through feature unbundling. Vendors are unbundling their product offering, and charging for each feature separately.  This practice can result in increased costs for users who need to access multiple features, as they may end up paying more than they would have with a bundled package. It can also make it difficult for users to compare pricing between vendors, as the unbundled features may be different across different vendors.

Evaluate the value of your SaaS subscriptions**

Before renewing or signing up for new SaaS services, conduct a cost-benefit analysis to determine if the price is worth the value it provides to your business. Consider factors such as the number of users, the features and functionalities, and the impact it has on your business operations. Use Cledara Engage to see what software your employees are actually using.

Negotiate with vendors**

If you have been using a SaaS service for a while, chances are you have built a relationship with your vendor. Don't accept a price increase without trying to negotiate with your SaaS vendor. You may be able to get a discount or other incentives, especially for larger contracts.

When negotiating, be prepared to discuss your current usage of the service, your budget, and your future plans. If your vendor is not willing to negotiate on price, consider asking for additional features or services to be included in your subscription.

Use a SaaS management platform**

Consider using a SaaS management platform to help you discover, purchase, and manage your company's software subscriptions. By identifying unused subscriptions and consolidating your subscriptions, you could save money.

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Richard Gargan

Richard is Cledara's in-house Content Lead. With a background in finance, he is responsible for the analysis of SaaS data to provide readers with insightful and informative analysis to help you optimize your software spend.

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